Landlords who didn’t participate in Philadelphia’s pandemic rental assistance program were dissuaded by bureaucratic red tape and uncertainty, concerns about the amount of money they could collect, and strained relationships with tenants, according to a report released Monday by the Housing Initiative at Penn and the Philadelphia-based redevelopment nonprofit Reinvestment Fund.
Nearly a third of Philadelphia landlords whose tenants applied for emergency rental assistance did not fill out their part of the application, which was required for the distribution of funds. But the report’s authors found that many property owners were trying to work with their tenants to avoid eviction regardless of whether they were accepting government aid and bound by a program’s renter protections.
The report drew on a survey of more than 600 landlords whose tenants applied for the first round of funding through the city’s pandemic rental assistance program and interviews with owners, managers, and landlord lawyers. It’s part of a larger effort by the Housing Initiative to understand property owners’ needs and figure out why a lot of landlords have not participated in emergency rental assistance programs in cities such as Philadelphia, Baltimore, Atlanta, and Los Angeles. The goal is to create better emergency relief programs and longer term programs and policies to help residents afford housing.
Cities have focused on the circumstances and needs of low-income households, but understanding the needs of property owners was “one clear gap in knowledge,” especially because many rental relief initiatives require landlords to agree to participate, said Vincent Reina, an assistant professor at the University of Pennsylvania and one of the report’s researchers.
“We’ve consistently bought into ownership-based models for rental assistance programs without fully understanding how owners engage with those programs and what the opportunities and challenges are,” he said.
Given differences in property owners’ varying sizes, locations and circumstances, the report’s authors wrote, rent relief programs with a one-size-fits-all approach will not help all the tenants and landlords who need help.
And because some landlords, no matter their size or circumstances, will not participate in government programs, rental assistance initiatives also should include an option for tenants to get funds directly. Last month, Philadelphia officials announced a direct payment phase of the city’s program. Roughly 4,000 renter households that applied and qualified for rental relief but whose landlords did not participate in the program are eligible for $20 million in assistance.
The pandemic has widened the gap between what renters can afford to pay and what they owe, said Sydney Goldstein, data director at the Housing Initiative at Penn. And since that gap will persist after the pandemic ends, “assistance will still be needed going forward,” she said.
Researchers pointed out that rent relief programs are temporary fixes for entrenched problems and that in addition to emergency initiatives, cities also should provide more long-term support for tenants and for landlords, who also face ongoing challenges.
“It is important to develop a broad set of programs that both stabilizes the supply of housing and ensures outreach to landlords of all kinds,” the report’s authors wrote. “Such programs and efforts are essential for the long-term availability, viability, and affordability of housing in Philadelphia.”
Property owners said tenants’ low incomes and inability to save to weather emergencies typically are the most frequent reason for nonpayment of rent, according to the report. Landlords who were interviewed by the Reinvestment Fund said that the $1,200 federal stimulus checks and boosted unemployment benefits helped people catch up on rent and that tenants need more assistance. Congress has reached a deal on a pandemic relief package to distribute more stimulus payments and extend unemployment benefits.
Property owners, especially those with a handful of rental units or less, are facing the same challenges during the pandemic as before — affording repairs on rental properties, paying mortgages and property taxes, filling vacancies — only worse. More than 28% of survey respondents said they are having trouble paying their mortgages, up from roughly 9% before the pandemic. Almost a quarter are struggling with property taxes, up from about 14%. More than a third are having difficulty paying for repairs, renovations, or both, up from 23%.
Their expenses continue while they collect less rent. Some landlords interviewed said they asked their lenders whether they can delay mortgage payments, but some banks are no longer allowing deferred payments.
Unsurprisingly, according to the survey, the pandemic is hurting small landlords more than larger ones. Smaller landlords also were more likely than large ones to participate in rent relief programs, to consider eviction restrictions a reasonable condition of the programs, to forgive some back rent, and to enter into repayment agreements with tenants. More than two in five landlords who responded to the survey have five or fewer rental units, the report’s definition of a small landlord. Landlords of this size also are less likely to know about assistance programs. The city relies on small landlords to offer units that residents can afford.
Smaller landlords also are less likely than larger ones to feel constrained by formal eviction policies.
From survey responses and interviews, researchers found that landlords who understand or who have similar experiences as their tenants are more willing to work with those tenants.
“That familiarity does seem to translate into a more empathetic response as everyone is trying to make their way through this really complicated period,” said Ira Goldstein, Reinvestment Fund’s president of policy solutions.
Despite varying participation in governmental rental relief programs, landlords say what they need most is rental assistance that can help them pay their mortgages and expenses. The newest federal economic relief bill includes billions of dollars for rental assistance.
More than 10,000 Philadelphians are receiving rental assistance through a city program distributing $40 million in mostly federal funds.
David Brogan, executive director of the New Jersey Apartment Association, said that rental assistance must be a priority and that “the federal government has failed miserably” in helping landlords and tenants.
Eviction moratoriums are adding to landlords’ problems, said Marlynn Orlando, chief executive officer of the Pennsylvania Apartment Association.
“It’s creating just long-term problems that the industry and residents will have a really hard time getting out of,” she said. “While we understand the intent behind it, if you have residents that can’t pay their rent and continue to live in an apartment where they can’t pay their rent and there’s no rental assistance for them, all they’re doing is accumulating debt they can never get out of.”
Landlords who were interviewed said that before the eviction moratoriums, they typically tried to work out repayment agreements to avoid spending money and time on the eviction process in court. But a few landlords said the threat of eviction motivated tenants to pay what they could. The study found that the city’s eviction moratoriums soured relations between some landlords and their tenants.
“One of the questions that has been raised is what is the impact on landlords if they can’t evict?” said Emily Dowdall, policy director at Reinvestment Fund. “There’s a clear public health reason and social safety net reason to want people to stay in their homes. But at the same time, there’s this issue of whether landlords should be acting as the social safety net.”